00:00We are in an extremely precarious time for any of these tech giants with the scale of
00:06capital investment that they're throwing towards AI these days. And the precariousness of the
00:12moment is compounded in the case of Meta, because among other things, they're being sued right and
00:20left for many things, but especially for harming the mental health of teenagers. I mean, it was
00:27interesting that among the one analysis of these results yesterday was that if they hadn't set
00:33aside $2.4 billion for legal contingencies, they would have made their earnings number,
00:41which they missed. So that's a, you know, $2.4 billion for most companies would be a really
00:47serious problem that you're expecting to pay that kind of money out because of legal settlements.
00:52For a company with $60 billion in profits annually, that's not so huge. But it just goes to
00:59underscore the complexity of this company's position in society and business. So that they
01:06continue to say they're going to spend $130 to $145 billion on capital expenditures for data
01:13centers this year. So, wow. So, yeah, David, it was interesting last night for investors,
01:19the comparison, the compare and contrast of Microsoft with their results and the stock trading up
01:26dramatically today, 14, 15% and yet Meta down about nine. What is Meta's AI strategy, do you think?
01:35Oh, that's a great question. And I think a lot of analysts on the call with Zuckerberg yesterday would
01:41have liked to have gotten an answer for that. I mean, for example, recently Bloomberg broke the news
01:47that they were considering renting out data center capacity to other companies like possibly
01:53Anthropic or OpenAI, which they haven't yet done. And he didn't say anything about it on the earnings
01:58call yesterday. If they did, that would be a good way of monetizing these extraordinary capital
02:05expenditures. So far, Zuckerberg keeps making funny noises about, hey, we probably have enough uses for
02:12this capacity ourselves. That wasn't a clear answer. They have begun charging money for a lot of things
02:20they never charged for before. So you can now pay $50 a month and get access to a human if
02:26you have
02:26a problem with your Instagram. If you don't pay $50 a month, good luck on that. But the answer is,
02:34I don't think they fully know because I think they're waiting to see how the whole industry
02:39settles out. But I do think that Zuckerberg published a very strident and optimistic op-ed in
02:48the Wall Street Journal this week talking about he believes personal superintelligence is going to be
02:54the transformative force in the world. And people have to have individual access to that. And big
03:01companies can't be gatekeepers into that sort of capability. So if you read between all these lines,
03:08I think their strategy is they want to more or less compete head to head with companies like OpenAI and
03:15philanthropic by using advertising to subsidize the offering of free AI services that they believe
03:23ultimately will go to individuals all over the world to enhance their lives. That's a long-term
03:30statement. But I think that would be a summary of how Zuckerberg thinks about it.
03:34And does Zuckerberg and Meta have the track record for that? I mean,
03:38it does selling ads very well, but does it do other things just as well?
03:43No. In fact, it has never done anything well aside from sell ads. It's never had a growing business
03:49of any size that really wasn't ad-based. I mean, they had 60 and a half billion in revenue and
03:5759.3
03:59billion of that was advertising this quarter. So, but ads can be used to pay for a lot of things.
04:07And I think that's what I was trying to say before that, you know, we've seen OpenAI,
04:11for example, talk about how we're going to try to become an ad company. They can do that and they're
04:16already doing it a tiny bit, but really that's a really hard transition for a company like that to
04:21make. It is the easiest thing. Zuckerberg and Meta are the, in some ways, the world's best
04:28advertising-based company. And as they grow in other areas, if they can continue to use
04:36that for competence, it could be a tremendous asset in expanding out in the AI arena. Right now,
04:45they're just using AI to make the ads more seductive and their services more addictive.
04:50And I mentioned when I sent you a note earlier, I think it's highly ironic that they're being sued
04:57for making young people's lives worse because of the addictivity of their services. And yet what
05:02they're spending all their AI money on right now is making
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